Paul Vasington: So I guess the first comment would be that we saw a $20 million contraction in Q3. We thought there’d be contraction in Q4. There was about $5 million. So year-over-year, it’s no impact on growth because we had $5 million contraction last year. So it wasn’t as bad as low or as high as we thought it might have been. But we saw a very good performance in the auto business, delivered significant growth in the quarter, both from market growth and outgrowth. So executed really well, delivered a really good outcome. As we look forward, we’ve looked back to 2021; we know that there was a depletion in inventory. It was a build in inventory in 2022. And it was about, I guess about $70 million or so when we thought would have to unwind.
We’ve seen some of that unwind. This year, there could be some more unwind next year. But we are seeing inventory levels increase in the channel in terms of wholesale in the market. So maybe that has come to an end, but we’re still going to need to watch it carefully because it appears based on the math that there should be more of an unwind to occur. It’s difficult to know the timing of that.
Jacob Sayer: Thanks, Shreyas for the question.
Operator: Our next question comes from Chris Snyder from UBS. Please go ahead.
Chris Snyder: Thank you. I wanted to ask on margins. When the company says operating margin will improve through 2023 towards the 21% target. Does this mean that the 21% can be hit in the back half of the year or just that margins will grow off the 19.5% pace in Q1? And I ask because, historically, Q1 is always the seasonal trough for margins. So is that just kind of typical seasonality? Or should we expect a more substantial build than that? Thank you.
Paul Vasington: Yes. The expectation is for margins to grow sequentially from the 19.5% upward. The 21% is an annual target level that we’re striving for. So I would expect us to have margins that continue to move up and very likely to be 21% in a quarter. But we’re really talking about can we deliver 21% for the year? We’re going to work to get to that as quickly as possible. But as Jeff said, volume is a big contributor to the margin expansion. So with better volumes, we obviously have a better chance to get into that number more quickly.
Jeff Cote: And it’s worth noting that during 2022 from Q1 to Q4, we saw 140 basis point improvement in margins, given that focus. And as Paul said, we’ll continue to work toward it. Thank you.
Jacob Sayer: Thanks, Chris.
Operator: Our next question comes from Jim Suva from Citigroup. Please go ahead.
Jim Suva: Thank you so much. Jeff, in your prepared comments, you mentioned a lot about new business wins and really starting to gain traction? Can you give us a little more color where are those new business wins? Are they more like exterior the car, battery management, charge stations for the car, interior, heating and controls for cars? I’m just trying to picture and visualize where you’re seeing the great success with this. Thank you.
Jeff Cote: Yes, absolutely. So obviously, it’s based — it’s distributed across the end markets that we serve. So this isn’t all about automotive new business wins, but it’s the biggest end market that we have, it’s the biggest portion of our revenue and it’s the biggest portion of the $1 billion. There are really two big areas that we’re winning. There’s a bunch of sockets that we had long-term positions in, so tire pressure, great management, environmental control that continue and grow going forward. Because in a battery electric environment, those systems need to be more finely tuned and more efficient. So we see more opportunity for outgrowth in those areas. The new areas are around what will be the powertrain. It’s the battery management process, so it’s contactors, fuses, isolation monitoring, battery disconnects.
